Bank Of America Is Toxic To Your Portfolio

Case in point, two thirds of Dow Jones Industrial Average components are down year-to-date. And of those, half are down 5% or more since the calendar flipped over to January. They're not just underperforming; they're underperforming by a factor of…
And Dow components are the least of your worries. A handful of other names (even big ones) look even more toxic right now. One of those is Bank of America (BAC).
Buying Bank of America s (BAC)ix months ago would have been a really good move. Shares of the big bank are up more than 14% over that time, stomping the S&P 500's performance over the same time period. But they're looking a whole lot less good now. In the last week, BofA has gone from being solidly in "uptrend" mode to teetering on the edge. Here's how to trade it.
Bank of America is currently forming a very well defined descending triangle pattern, a price setup that's formed by downtrending resistance above shares and horizontal support to the downside at $16. Basically, as shares bounce in between those two levels, they're getting squeezed closer and closer to a breakdown below $16. When that happens, we've got our sell (or short) signal.
It's no coincidence that a breakdown below $16 also means a break in the uptrend that's been in force in BAC since last summer. I'd recommend staying away from the long side of this big bank until it exits the triangle -- one way or another.
To see this week's trades in action, check out the Toxic Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
RELATED LINKS:
>>5 Stocks Under $10 Ready to Explode
>>5 Stocks Insiders Love Right Now
>>5 Stocks Ready to Skyrocket Higher
Follow Stockpickr on Twitter and become a fan on Facebook.